Identifying Your Company Culture

Company culture has made headlines as the HR director’s topic of choice for years now. And because of what we know about the impact company culture has on internal statistics like turnover and retention and external statistics like profitability, we think that’s great!

We’re especially excited about research that helps HR leaders understand their organizational culture and create an actionable plan modify it in the direction of their vision – which is all too often easier said than done.

If you want to start thinking about these topics, but you’re not quite ready for that level of granularity, we’ll explore a model based on research from the University of Michigan at Ann Arbor’s Robert E. Quinn and Kim S. Cameron. It outlines four kinds of company culture: hierarchy, market, clan, and adhocracy.

By understanding which type of culture best describes your company today and which best fits your vision for the future, you’ll see plenty of opportunities to adapt.

Company Culture Type #1: Hierarchy

What is it?

A hierarchy company culture refers to the traditional top-down organization that built such stable, efficient, and consistent businesses in the mid-1900s through today. When you think of a typical corporate business, you’re likely imagining a hierarchy company culture in which there are several layers of management between leadership and employees.

The benefits of a hierarchy company culture are that employees and leaders have clear lines of decision-making, authority, rules and procedures, and accountability. According to Quinn and Cameron, this can lead to reliable and smooth-flowing production, especially at scale. The downsides (considering today’s unpredictable business environment) is that it tends to move more slowly on decisions and changes, which can inhibit innovation and make employees feel caught in red tape (after all, this is the culture that gave birth to Dilbert).

How do you know you’ve got it?

You can spot a hierarchy company culture by how it organizes its employees (there tend to be more levels of management than in other cultures). You can also spot it by understanding how employees get promoted; in a hierarchy company culture, promotion flows from knowing the rules and procedures and being promoted from the bottom up.

What should you do if you want it?

If you want a hierarchy company culture but you’re stuck in another type, it’s time to focus on processes and procedures. For example, let’s say you run the HR department for a successful startup marketing agency. What worked in the initial stages (12-hour workdays, last minute hiring and firing, and fly-by-the-seat-of-your-pants processes) won’t work as your company gets more established and must deliver at a higher rate of consistency. You’ll be able to move your organization toward a hierarchy company culture by bringing in more planning positions such as project managers and managers and building official processes that employees must follow.

Company Culture Type #2: Market

What is it?

Quinn and Cameron note that the market company culture became popular in the 1960s (though it’s unrelated to the marketing function within a company or the consumer marketplace). Instead, market company cultures are cultures that focus on a business’s external environment over its internal environment, like directly tying every position to customer support or profitability.

The benefits of a market company culture are strictly business-focused, as they tend to be defined by premium returns on assets and corporate competitiveness (think Philips Electronics and General Electric). The downsides are that employees who aren’t motivated by an inherently financial version of success can easily become disconnected from the work they do, and those that are motivated by that kind of success can become too competitive or cutthroat. Great for the bottom line, but not great for company culture qualities of Teamwork or Collaboration.

How do you know you’ve got it?

Unless accidentally passed on by an unchecked founder mentality, market company cultures are usually built intentionally. If your leadership team has put a large focus on winning, results, and achieving stretch goals and targets, you likely have a market company culture.

What should you do if you want it?

If you want a market company culture but you’re stuck in another type, your best bet is to get serious about how each position within the company contributes to the external success through customer satisfaction, consistency, product development, or profitability. You’ll also want to consider adding financial incentives for better performance so that you can awaken each employee’s inner competitor.

Company Culture Type #3: Clan

What is it?

The clan company culture is modeled after a family; it focuses on the values of shared goals, cohesion, participativeness, and, as researchers Quinn and Cameron write, “we-ness.” Clan company culture has risen in popularity in the past decade as employees seek out more supportive environments for the work they do, and these environments are typically defined by employee involvement programs and semi-autonomous work teams.

The most obvious benefit of clan company cultures is the ease of engagement and collaboration among teammates. Because there tend to be fewer levels of management between leadership and employees, there tends to be a faster and more candid exchange of information. The downsides of this kind of company culture are that businesses can sometimes put internal needs and priorities over business-building priorities like profitability. Also, a group of like-minded thinkers often lead to groupthink, which can inhibit innovation.

How do you know you’ve got it?

You have a clan company culture if your teams work together more than they work apart; if you reward employees on the basis of team accomplishments instead of individual ones; if you’re open to feedback and your employees take you up on it; and if there are few to no barriers between leadership and employees such that a leader might be considered a mentor or parent figure more than a CEO.

What should you do if you want it?

If you want a clan company culture but you’re stuck in another type, it’s time to start listening to employees. The best way to transition into a clan company culture is to invite employees to provide direct and honest feedback about their workplace and the business without censure. You’ll also want to encourage employees to be themselves at work through team-building activities and personal engagement initiatives like mentorship pairs and team lunches.

Company Culture Type #4: Adhocracy

What is it?

Rooted in the word ad hoc, the adhocracy company culture is the most recent evolution of company culture based on our transition from the industrial age to the information age. It’s defined by its assumptions that innovative and pioneering initiatives lead to success and that businesses should focus on developing new products and service (think aerospace, mobile app development, and technology companies). It also jumps off the assumption that the products and products themselves are rather temporary.

The benefit of an adhocracy company culture is that innovation comes first. This culture emphasizes individuality, risk taking, wearing multiple hats, and anticipating the future, and each of those values leads to creative thinking and dynamic product development. The downside, of course, is the risk of investing so much in new and untested initiatives and finding that they can’t sustain your business. Also, focusing so much on individuality may lead adhocracies to recruit specialists who find it difficult to collaborate.

How do you know you’ve got it?

If your business focuses on new and trending products and services and promotes adaptability, flexibility, and creativity as the most important attributes for every employee, you may have an adhocracy company culture. You also may have an adhocracy company culture if the power within your organization flows from team to team depending on who is working on what.

What should you do if you want it?

Because hierarchy, market, and clan company cultures all focus on longevity and consistency, it can be difficult to transition to an adhocracy company culture without completely restructuring how you do business. However, some organizations might see some benefit from adopting some adhocracy values of creativity and entrepreneurship or guiding certain departments or teams to an adhocracy culture through professional development or customized recruiting processes.

The more you know about your company culture, the more empowered you’ll be to make it a competitive advantage. Consider which description best fits your company culture and what you can do to capitalize on your strengths and support your weaknesses.

If you’re interested in understanding the nuances of your company culture, ask us about our strategic culture assessment.

AuthorSarah Greesonbach

Sarah is a writer for CultureIQ. By analyzing and condensing cutting-edge research and data, she helps leaders and HR professionals develop their instincts and arrive at actionable insights for employee engagement and business performance. She loves to consider the possibilities of humanizing, organizing, and minimalizing all things HR.